How to Save Money When You Are a Freelancer
<p>There are many advantages to be a self-employed person or a freelancer. You have the possibility to work in your pajamas, to decide when and where you want to work, as well as your projects or customers. However, as mentioned in many of our <a href="https://www.momenteo.com/blog/" target="_blank">Portrait of a freelancer articles</a>, you will need to learn how to live with uncertainty since this liberty comes with responsibilities. You are now the person in charge of your finances. How is it possible to save money then?</p>
<p>The question here is not if it is possible to save money but how when you are a freelancer or a self-employed person. You do not really have the choice to save money if you want to want to live from your work for a while. It is recommended to always have at least a 3-month reserve fund to survive off-peak periods or unexpected expenses. Some studies also say that this reserve fund should cover up to 6 months when you are your own boss. It can seem like a huge amount of money; however, we are sure that you would be relieved to have this money if something wrong happens. Now that you know that you need to save money whether it is for unexpected expenses or your retirement (especially since you are the only one that can contribute to your retirement savings), here are some tips to help you. Trust us, it will be easier with time.</p>
<h3><strong>Put money aside every time you get paid</strong></h3>
<p>To start with, since you do not always know in advance how much work you will have, it is important when you get paid to put some money aside. To do this, you need to make a budget. Make a list of all expenses, from your lodging cost, groceries, etc. Then, put aside a portion of the remaining amount at the end of the month in an account that will stay available if needed. Do it each time you receive a payment, after having paid all invoices. You could put aside 30% of the remaining money in a TFSA for instance. If you are not sure of your abilities to save money, you can also plan automatic transfers if needed. Although it might seem boring to save money instead of buying some new clothes or going once more at a good restaurant, your life will be easier with adequate financial padding. Therefore, it is important to take into consideration the necessity to put aside a portion of your remaining money when you set your rates.</p>
<h3><strong>Follow your incomes and your expenses closely</strong></h3>
<p>Another way to help you save money is to follow all the invoices you send, as well as your expenses. <a href="https://www.momenteo.com/" target="_blank">Momenteo</a> is precisely here to help you with that. It would be a shame to not receive a payment because you forgot to send the invoice, right? It will also be easier to make follow-ups for overdue invoices if you are up to date with your administrative work. If everything is in order, it will be easier to follow where your money is and to put some aside. On another note, do you have any idea of the amount you spend on your clothes, your hobbies or restaurants? Take a look at your bank statements and analyze how much you spend on these things. It often happens that we underestimate your expenses. The goal here is not to deprive yourself but to be more responsible. </p>
<h3><strong>Do not forget your tax deductions and insurances</strong></h3>
<p>Did you know that as a self-employed person you have access to some tax deductions? In fact, you can deduct certain amounts you spend related to stationery, computer equipment, and software, your cellphone or the place where you work from. (Momenteo is also a deductible software!) For example, if you work from home, you can deduct a portion of your electricity and internet bills, as well as your mortgage as company expenses. Even your car and some of your outings can be accepted as these expenses. However, take the time to get all the information you need. Furthermore, you could also take this opportunity to verify if you are eligible for the quick method of accounting.</p>
<p>You should also think about getting insurances in order to protect you if you become seriously ill or if your work needs some (professional liability insurance for example). A number of financial institutions or insurance companies often have packages specially made for freelancers and self-employed people. </p>
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<p>In conclusion, it is true that to save money is the most exciting thing in life; however, peace of mind is worth a lot. It is likely that you will sleep better if you know that you have enough money to continue to do what you love whatever what can happen. Start by putting aside a small amount and then increase it with time. Do not hesitate to meet a financial advisor too. This expert will be able to guide you and help you make a game plan on how much you need to save and your retirement. </p>
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